The most surprising outcome of the Solow growth model is that
A) the population growth rate has no effect on the standard of living.
B) the capital-labor ratio has no effect on the output-labor ratio.
C) a higher rate of national saving does not lead to a permanently higher rate of output growth.
D) a higher rate of depreciation lowers the capital-labor ratio, but not the output-labor ratio.
C
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Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include the following
A) Rising interest rates indicate a tightening of monetary policy, whereas falling interest rates indicate an easing of monetary policy. B) Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero. C) Avoiding fluctuations in the level of unemployment is an important objective of monetary policy, thus providing a rationale for interest-rate stability as the primary long-run goal for monetary policy. D) Other asset prices beside those on short-term debt instruments do not contain important information about the stance of monetary policy because they are not important elements in various monetary policy transmission mechanisms.
When the coupon rate on newly issued bonds decreases relative to older, outstanding bonds, what happens?
A) The market price of the older bond falls in the secondary market. B) The market price of the older bond rises in the secondary market. C) Older bonds can still be sold at their face value. D) Older bonds will sell for more than their face value.